unaligned

JetBlue Airways stock tumbled to a nearly 12-year low Tuesday as the company forecast a loss for Q4 and heads to court to defend its acquisition of budget carrier Spirit Airlines, a purchase it argues is crucial to its future. Shares fell more than 10% Tuesday to $3.76 apiece. Spirit shares fell more than 12% to a three-year low. The U.S. Department of Justice sued in March to block JetBlue’s $3.8b all-cash purchase of Spirit, a deal the airline reached with the discounter in 2022 after a bidding war with rival Frontier Airlines. The deal would create the fifth-largest airline in the U.S. JetBlue argued it needs to buy Spirit to grow and better compete with giant carriers — American, Delta, United and Southwest — which control about three-quarters of the U.S. market and are products of megamergers themselves. The Justice Department, however, alleges that “the proposed transaction will increase fares and reduce choice on routes across the country, raising costs for the flying public and harming cost-conscious fliers most acutely.” JetBlue plans to remove seats from Spirit’s bright-yellow planes and outfit them with seatback screens to match JetBlue’s interiors. Spirit’s business model is based on packed planes, no-frills fares and fees for everything from seat assignments to carry-on luggage, while JetBlue has more amenities and fewer seats on board. The lawsuit is a test for President Joe Biden’s Justice Department, which has aggressively pursued antitrust cases with mixed results in the airline, health-care and publishing industries, among others. The trial starts Tuesday and is set to last about three weeks in US District Court in Boston. In May, the Justice Department won a lawsuit to undo a partnership between JetBlue and American Airlines in the Northeast, an alliance the airlines started dissolving in the summer. At the time, JetBlue said it would focus instead on acquiring Spirit, a deal it expects to close early next year.<br/>

The US crackdown on airline consolidation faces a new test this week with the trial of a government lawsuit claiming the $3.8b takeover of Spirit Airlines by JetBlue Airways would reduce competition and boost fares for passengers. While investors consider approval of the deal to be a long shot, the trial set to start Tuesday before a federal judge in Boston comes at a critical time for the industry. Domestic low-cost carriers have cut service as fares slide and travel slows, while antitrust regulators crack down on airline consolidation after decades of lax enforcement. JetBlue reported a Q3 loss Tuesday that was worse than Wall Street had expected, and said it would lose money for the full year. Spirit’s Q4 revenue forecast missed estimates last week and the stock is down more than 30% this year. The US Justice Department, along with six states and Washington DC, claims JetBlue’s bid for the largest deep-discount carrier would limit flight options, increase ticket prices and hurt cost-conscious travelers. JetBlue contends the combination is needed to better compete with the “Big Four” domestic airlines, American Airlines Group, Delta Air Lines, United Airlines and Southwest. If the deal is blocked for violating antitrust laws, JetBlue would have to pay Spirit and its shareholders a $470m breakup fee, according to their merger agreement.<br/>

JetBlue Airways’ $3.8b deal to acquire Spirit Airlines is an effort to get rid of a low-cost rival and boost ticket prices across a wider network of flights, a US Justice Department lawyer told a judge at the start of an antitrust trial in Boston. “JetBlue is counting on the fact that eliminating Spirit and the competition Spirit provides will allow JetBlue to increase fares,” DOJ attorney Arianna Markel said Tuesday during her opening statement. “That is real harm to real people.” The deal is intended to make “a bigger, turbo-charged JetBlue,” she said. “But bigger isn’t always better.” The federal government, along with six states and Washington DC, sued last year to block the deal it says would kill JetBlue’s fastest growing competitor in the US and limit choices for passengers. But JetBlue lawyer Ryan Shores called the government’s objections “misguided” and told the judge that combining with Spirit was necessary for the two small carriers to better compete with larger rivals. The case is the latest effort by the federal government to crack down on airline consolidation after decades of lax enforcement that left the nation’s four biggest airlines — American Airlines Group Inc., Delta Air Lines Inc., United Airlines Holdings Inc. and Southwest Airlines Co. — with 80% of the market. JetBlue’s internal documents “will show that a bigger JetBlue means fewer planes, fewer seats and higher fares,” Markel said, adding that the company plans to reduce its capacity after the combination by removing 10% to 15% of available seats. “JetBlue itself projects that fares will increase 30% after Spirit exits.” The government lawyer said Spirit is able to charge less than JetBlue because it has lower costs than its rival. The so-called “Spirit effect” on routes reflects the 20% average drop in fares from all carriers on routes where the company competes, Markel said.<br/>

JetBlue Airways expects six of its Airbus A321neos to be grounded by Pratt & Whitney (P&W) engine problems by year-end – and for that number to rise in 2024. “We’ll end next year with a high single-digits, low double-digits number of aircraft on the ground,” says Ursula Hurley, CFO of JetBlue. During its 31 October quarterly earnings call, the New York-based low-cost carrier described how it stands to be affected by P&W’s recall of PW1100G geared turbofan (GTF) engines due to disk problems, which has caused broad fleet disruptions among A320 operators. <br/>JetBlue currently has 25 A321neos in service and four in storage, according to Cirium fleets data. The majority of GTF engines on JetBlue’s aircraft were manufactured post-2021, meaning that they were made outside of the production run of engines that currently need inspection. Ursula notes that a “handful” of JetBlue’s GTF engines will need full part replacements. JetBlue is the latest airline to forecast aircraft availability issues related to necessary inspections of potentially defective GTF engines. Mexican ultra-low-cost carrier Volaris recently disclosed that more than half its fleet could be affected by the recall, while US discounter Spirit Airlines said it anticipates an average of 10 aircraft will be grounded through the end of 2024. Facing headwinds on multiple fronts, JetBlue is “proactively managing our capacity in light of higher fuel costs and aircraft constraints, and wll temporarily reduce flying in certain markets and in off-peak periods”, says COO Joanna Geraghty. JetBlue says it is anticipating a forthcoming aircraft service bulletin from P&W that will specify which GTF engines must come off wing. “That is important because it will give a very detailed view of serial numbers and it will solidify what we believe to be our exposure in 2024 and beyond,” Hurley says. CE Robin Hayes says the carrier is “focused on controlling what we can control” as it posted a Q3 loss of $153m. <br/>

Online travel agents have won a High Court fight with Ryanair after suing over refunds paid after flights were cancelled or changed. A judge has awarded three companies in the On the Beach group GBP2m damages after considering evidence at a High Court hearing in London. Judge Nigel Cooper outlined his conclusions in a ruling published on Tuesday. The judge said On the Beach, Sunshine.co.uk and Classic Package Holidays had claimed GBP2m in total. He said that figure represented the cost of flights refunded to travellers for package holidays in “circumstances where Ryanair have cancelled or made what are described as major changes to flights which were part of the packages”. Lawyers representing the airline disputed that the On the Beach group had “any good cause of action” against Ryanair. The judge made findings in favour of the On the Beach group and said its claim succeeded “in the amount” of GBP2,056,745. “On the Beach group’s claim in this action is for a sum of some GBP2m which they say represents the cost of flights which they have refunded to travellers for package holidays in circumstances where Ryanair have cancelled or made what are described as major changes to flights which were part of the packages,” said the judge in his ruling. “Although Ryanair dispute that On the Beach group have any legal entitlement to the refunds claimed, Ryanair have acknowledged …that for commercial and political reasons Ryanair are willing to refund the cost of flights which have been cancelled provided that appropriate arrangements are put in place so that they are not at risk of being required to refund travellers twice for the same flight.” The judge indicated that the litigation was “part of a much wider” dispute “as to the extent to which online travel agents may book flights operated by Ryanair”.<br/>

China's Xiamen Airlines on Tuesday launched a direct air route linking Xiamen, a coastal city in east China's Fujian Province, with Qatar's capital of Doha. The Xiamen-Doha passenger service will use a Boeing 787 aircraft and offers a round-trip flight every Tuesday and Friday, shuttling between the Xiamen Gaoqi International Airport and the Hamad International Airport in Doha. The outbound flight took off from Xiamen early Tuesday morning. The return flight is scheduled to leave Doha at 7:30 p.m. (local time). This is the first direct flight service linking Fujian with Doha. Earlier this month, the airline company opened a direct air route linking Beijing and Doha, enabling the airline to become the first Chinese carrier operating the China-Qatar route. Headquartered in Xiamen, the company said the launch of the Xiamen-Doha route further widens China's air channel to Qatar, adding to the Beijing-Doha air route.<br/>

The Pakistani government has given Fly Jinnah (9P, Karachi International) its consent to commence scheduled international flights. Pakistani media report that a federal cabinet meeting last week approved the application after it secured the support of Pakistan's Civil Aviation Authority (PCAA) and the prime minister's office. In August, the Air Arabia-backed airline applied for the rights to operate flights to Afghanistan, Azerbaijan, Bangladesh, Iraq, Malaysia, Oman, Qatar, Saudi Arabia, Thailand, Türkiye, and the United Arab Emirates (UAE). Except for Azerbaijan, existing air service agreements between Pakistan and each country allow for multiple operators on the relevant country pairs. While FlyJinnah has yet to disclose which market it intends to fly to first, except for Bangladesh, all the country pairs have at least one passenger operator already servicing them and, in some cases, multiple operators. <br/>

Grounded Malaysian carrier MYAirline is in discussions with investors about shoring up its funding with the aim of resuming operations. The carrier, grounded since 12 October, says it is focused on securing a recapitalization package. “We have received over 15 proposals from potential investors, 2 of whom are in advanced stages of negotiations,” says MYAirline. “The team is working around the clock to finalize a recapitalization package that will revive our operations. This will also facilitate the reimbursement of monies to affected passengers as well as payment of salary and statutory dues.” The airline adds that it has also replied to show cause notices from The Civil Aviation Authority of Malaysia and the Malaysian Aviation Commission (MAVCOM) For the time being, the carrier’s air operator certificate is suspended. MAVCOM has said that it is considering a suspension of MYAirline’s air service license, which allows the airline to sell tickets. Both documents are required for Malaysian carriers to operate scheduled services. Meanwhile, Malaysian media reports indicate that some MYAirline staff have filed police reports about unpaid wages. MYAirline alludes to salary issues, noting that no staff have been laid off. “MYAirline would like to reiterate that we have not terminated or placed any staff on unpaid leave since 12 October 2023 until to-date,” it says. “We do understand the difficulties faced by our staff and we would like to assure them that we are doing everything in our power to address their plight. We would encourage our staff to cooperate with us in this difficult time as we have their best interests at heart.”<br/>

Papua New Guinea carrier Air Niugini has formalised its commitments for 11 Airbus A220s, including orders with the airframer for six examples. The airline will get six new A220-100s directly from Airbus, says the airframer. In addition, it will obtain three A220-300s and another pair of -100s from lessors. “This is a milestone in the history of our national airline that will support the growth of trade and tourism in Papua New Guinea,” says acting CE Gary Seddon. “The new aircraft will offer the highest levels of comfort for our passengers, while also ensuring a significant reduction in fuel consumption and emissions when compared to the aircraft they will replace.” The deal was formerly concluded at an event in Port Moresby attended by Seddon, Airbus’s Asia-Pacific head Anand Stanley, and local government officials. Air Niugini originally announced its intention to obtain 11 A220s in a 16 August Facebook post, saying that he aircraft will arrive from 2025. The A220s will replace the airline’s fleet Fokker jets. Cirium fleets data shows that Air Niugini has four Fokker 100s and four Fokker 70s in service. It also has three Fokker 100s and two Fokker 70s in storage. The new Airbus jets are part of an overall fleet modernisation, which also includes an order for two Boeing 787-8s, which the US airframer announced in June. “Air Niugini has seen how much more the A220 brings to their airline than the competing product in this space, so much more efficiency, range, comfort and growth potential,” says Airbus CCO Christian Scherer. “We thank Air Niugini for its confidence in Airbus and are committed to offering our full support to the airline as it transitions to its new fleet.”<br/>